Debt an issue for one in three pensioners

Debt isn`t just an issue for younger people, as research by an independent equity release adviser has shown.

Key Retirement Solutions looked at more than 4,400 of its customers who`d applied for an equity release product last year and found that fully one in three people over the age of 65 was still carrying debt of some kind, in the form of mortgages, loans and cards.

On average, the debts those people were carrying were worth a total of £25,418. That`s an average, of course, which means some were much more deeply in debt - in some cases, they were carrying credit card debts of £90,000, unsecured loans worth a quarter of a million pounds, or mortgages worth over a third of a million.

The company believes that many pensioners, unable to access other forms of credit in the credit crunch, have had to rely on credit cards just to fund their living costs.

And many are using some or all of the equity they`ve released to pay off their debts: in the final quarter of last year, 23% of customers did this, while 31% did so in the first three months of this year.

Unsurprisingly, servicing debts can be a major burden for people in retirement. Figures from the Office for National Statistics show that the average pensioner household has an income of £17,727 (before tax). Since borrowers over the age of 65 were paying an average of £385 per month towards their debts, that means they were spending 26% of their income on their debts, on average.